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Case details

A landmark decision of the High Court has clarified the liability of trusts and trustees with respect to the Health and Safety at Work Act 2015 (Act).

In WorkSafe New Zealand Mhi Haumaru Aotearoa v RH & Jury Trust [2023] NZHC 3871 , WorkSafe charged the RH & JY Trust and its trustees following a fatal accident on a dairy farm owned by the Trust. A young child was visiting his grandfather at work on the dairy farm when his jacket became caught in an exposed rotating shaft on a backing gate.

WorkSafe filed identical charges against the Trust, and in the alternative, the three trustees. In WorkSafe’s view this was a situation where liability was more properly placed on the Trust because it was conducting business and the failures were systemic failures of governance and management, rather than personal failures by the trustees.

In the District Court, the charges against the Trust were dismissed on the basis that a trust does not meet the definition of “person” in s 16 of the Act.

On Appeal to the High Court, Justice Harvey said that the Act’s criminal penalties purposely impose a higher maximum penalty on entities than it does for individuals. Taking a narrow interpretation of s 16 would unnecessarily frustrate this purpose.

The Judge held that the Act does not state whether a trust meets the definition of “person” under the Act and the definition of a ‘person conducting a business or undertaking’ (PCBU) should be wide. He held that the trustees, acting collectively as a “body of person … unincorporate”, do meet the definition of a PCBU. Thus, the trustees could collectively be charged under the Act.  However, it may be “too far” to allow trusts to be prosecuted under the Act due to established trust law concepts such as trustees not being liable for the actions of a co-trustee.

The Judge also observed that there was no advantage to prosecuting the Trust as opposed to the trustees collectively, as either way the maximum $1.5m penalty was available. He also clarified that a trust may, if the specific facts of the situations and law of trustee indemnity allowed, indemnify the trustees.

Message for Employers

This case sends a strong message that trustees (where trust assets include businesses or undertakings) have health and safety obligations and they must ensure the workplaces they govern are safe.

Trusts cannot be used as a mechanism to by-pass health and safety obligations and this decision reinforces the importance of ensuring a safe workplace regardless of the business form.

If you are a trustee and would like to discuss what this means for you, please contact our team.

Disclaimer: We remind you that while this article provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.